Talks over construction contract officially end amid dispute over costs exceeding 1 trillion won
Negotiations between Korea Hydro & Nuclear Power and a consortium of Daewoo Engineering & Construction and Doosan Enerbility over a construction contract for the Dukovany nuclear power plant project in the Czech Republic collapsed Thursday after prolonged difficulties. KHNP said it will begin terminating its joint cooperation agreement with the existing consortium and move to select a new contractor.
KHNP announced Thursday morning that it intends to end negotiations with the Daewoo Engineering & Construction–Doosan Enerbility consortium over the construction contract for the Dukovany nuclear power plant project.
"This is due to differences between the two sides on key contract terms," KHNP said, adding that the parties had worked through working-level talks, a dispute-resolution committee and executive-level negotiations in an effort to reach an amicable agreement but were ultimately unable to do so.
KHNP said it will proceed with terminating the joint cooperation agreement with the existing consortium while preparing to launch a bidding process to select a new contractor. "We are putting together a comprehensive response plan, including preparations for a bid to select a new contractor," the company said.
The Dukovany project involves KHNP supplying two APR1000 Korean-designed reactors, each rated at 1,000 MW, to the Dukovany site in the Czech Republic. The total project cost is approximately 407 billion koruna ($18.7 billion).
When KHNP won the contract, it agreed to deliver the full scope of nuclear plant construction — covering engineering, procurement and construction, commissioning, and nuclear fuel supply — alongside the "Team Korea" partners it brought in: Kepco Engineering & Construction, Doosan Enerbility, Daewoo Engineering & Construction, Korea Electric Power Corporation Fuel and Kepco Plant Service & Engineering. KHNP signed a main equipment supply contract with Doosan Enerbility worth about 5.6 trillion won and concluded a comprehensive design services contract with Kepco Engineering & Construction.
The construction contract with Daewoo Engineering & Construction, the key contractor, remained unfinished more than a year and four months after KHNP signed the main contract with the Czech client. The sticking point was a dispute over construction costs. KHNP reportedly demanded that Daewoo Engineering & Construction cut its construction fee to more than 10 percent below the original bid price — a reduction said to exceed 1 trillion won. Daewoo Engineering & Construction indicated it could not accept the terms, and in March allegations emerged that KHNP had pressured the company by signaling it could replace the contractor with another firm.
oskymoon@heraldcorp.com
